British Airways Parent’s Boeing 737 Max Order Is Prompted by More Than Just Price: CEO

Benjamin Katz, Bloomberg

- Jul 12, 2019 7:00 am

Skift Take

When British Airways parent company IAG announced the order of Boeing 737 Maxes at the Paris Air Show last month, many saw it as a decision motivated by cost and fleet diversification. It turns out, CEO Willie Walsh was unimpressed with Airbus, too.

— Rosie Spinks

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IAG SA Chief Executive Officer Willie Walsh said frustration with Airbus SE over late jetliner deliveries was a factor in his decision to place a $24 billion order for Boeing Co.’s grounded 737 Max model.

Cost and a desire to have a mixed narrow-body fleet weren’t the only considerations in the purchase, with IAG experiencing a 70-day delay on average for handovers of the A320neo aircraft, which competes with the Max, the CEO said in an interview.

The outline deal for 200 737s, revealed at the Paris Air Show last month, “should be an indication not just to Airbus but to everybody that we’re unhappy with their performance,” Walsh said in Brussels. “I know everybody interprets it as an issue of price, it’s not.”

While Airbus has pledged to compete for IAG’s order, announced as a letter of intent and not yet part of Boeing’s official backlog, Walsh said he fully intends to sign off on the deal and won’t be approaching the European manufacturer, adding that he doesn’t want to be “solely dependent” on one company for his group’s entire narrow-body fleet.

For Boeing, the purchase by the British Airways parent marked a surprise show of faith in the Max from a respected buyer after the jet was grounded in March following two fatal crashes in five months. Walsh, a former 737 pilot, said unparalleled scrutiny of the plane before it resumes flying should restore faith in the model among travelers.

“When the Max comes back into service it will have gone the most thorough examination of any aircraft anywhere, anytime,” Walsh said. “That’s why I think people will have confidence in the aircraft.”

Airbus has been battling to recover A320 delivery schedules after repeated production and design delays with engines, and more recently, the challenge of manufacturing bespoke cabins.

Deliveries of the Toulouse, France-based company’s wide-body jets are also late, but to a lesser extent, and Walsh said he’s still engaging in talks on models including the A330. He also placed orders in Paris for the A321 XLR, the world’s longest-range single-aisle plane.

Boeing separately revealed Thursday that 737 program chief Eric Lindblad is retiring after barely a year in the post. The logistical challenge of returning the Max to flight once cleared by regulators will now fall to Mark Jenks, who has been running the company’s New Midmarket Airplane program.